State Authorities Seeking to Change Mining Paradigms

STATE AUTHORITIES AND THE ESTABLISHMENT OF FAVORABLE LOCAL ENVIRONMENTS PANEL

The Mexican mining industry acknowledges the sector needs to change the public’s perception. The strategy to achieve this, however, must focus not only on better communication but also on the government being a facilitator and not an obstacle to mining activity, agreed the panelists, including state government officials, at the Sheraton Maria Isabel Hotel in Mexico City on Wednesday.

Speaking at the Mexico Mining Forum 2018, the officials – Jesús Mesta, Deputy Minister of Economy in Chihuahua, Ramón Dávila, Durango Minister of Economy, Alberto López, Director General of the Mining Directorate at the Sonora Ministry of Economy and Álvaro Burgos, Guerrero Minister of Economy – discussed their role in changing paradigms and fostering socially responsible and sustainable practices.

“Why is Mexico, a traditionally mining country, still ashamed to claim that we are miners?” asked Armando Ortega, panel moderator and Vice President for Latin America of New Gold. The answer, he said, has to do with the stigmas that still surround mining in the country. “We are good at mining but not very efficient at sharing the messages of the industry to the communities, as other mining jurisdictions do to be successful,” he said. Mesta agreed. “We have a communication issue, which I believe is our problem, as we have been unable to broadcast how mining is progressing in the country.”

Dávila pointed out that “we have allowed the bad press to overtake us, but I believe that we must not be ashamed of mining as we have strived for more socially responsible practices. However, we must learn to better promote the industry and clean up its name.” He proposed a close collaboration between the government, local communities and mining companies to solve problems together and reach win-win solutions that will lead to the industry’s growth.

Along the path to unlocking Mexico’s mining potential, it is key to restore the industry’s competitiveness, to which political strength is vital. López is convinced that “Mexican mining has a high level of economic and technical power, but lacks political strength, which has it troubled.” Last year the Mining Chamber made an effort to reduce mining taxes, but it was fruitless. “We see how other industries act when they have the political strength to change the law. We must recognize this weakness of ours and unite in a strategic alliance to better address the issue,” he added.

It is clear for the industry that the first move toward political strength concerns the mining taxes. López remarked that “in Sonora we strive to reduce the exploration costs and we are very serious about it.” Mesta complemented this by focusing on the importance of putting “pressure on and working together with the federal government to create and establish favorable fiscal conditions that will not be subject to who is in office.”

But besides the tax regime, political will is key. In the case of Guerrero, the state has “sought different paths to unlock the potential of its mining industry, as its government is convinced that it has to bet on the mining industry,” said Burgos. Some of the main companies operating in the state are Torex Gold with the Media Luna Mine and Alio Gold with the Ana Paula Project, among others. “The feedback we get from our mining partners is that today they perceive a different and more favorable environment in the state. I believe it is fundamental for companies to have a social commitment and responsibility. Our role in the public sector is to foster the changes of paradigms around mining.”

Bureaucracy is another large obstacle that has hurt the industry’s competitiveness. “The best thing that state governments can do is to let mining companies work; often our bureaucracy is a huge obstacle for them,” pointed out López, to which the moderator Ortega responded with a well-known proverb: “A company may have 100 wonderful ideas and then be confronted with 101 obstacles by the government,” he said.

The officials concluded the panel on the need for mining policies to transcend political terms and parties. Likewise, for all industry players to work together and present a united front. “As long as we are not united as an industry, we won’t achieve the change we seek and need within the mining industry,” said Mesta.